Your Low Credit Score Could Cost You Thousand$ On Your Car Loan

February 26, 2020 Automotive Loans

MoneyTips

Your credit score is one of the most important variables that lenders use to assess your risk. A low credit score can disqualify you for an auto loan, or force you to pay higher interest rates – but how much will higher interest rates cost you in the long run? New data from Experian shows just how much a poor credit score can cost you over time.

As of the second quarter of 2018, Experian shows a 5.76% average interest rate for new car loans – not far above the 4.45% average rate for prime borrowers with credit scores between 661 and 780, or the 3.47% average rate of super-prime borrowers with credit scores above 781. Non-prime borrowers with credit scores between 601 and 660 are charged an average 7.55% interest rate for new car loans.

However, the penalty for lower credit scores is significant. Subprime borrowers (501-600 credit score) pay 12.14% interest on average, and deep subprime borrowers (300-500 credit score) pay a whopping 14.93% on average for their au…

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